New law loosens restrictions on community association board meetings

John Wildgoose / Getty Images

Beginning Jan. 1, 2017, board members can meet at any time, in person or via phone or email, to discuss litigation, third-party contracts, rules violations and an owner’s unpaid share of common expenses.

Beginning Jan. 1, 2017, board members can meet at any time, in person or via phone or email, to discuss litigation, third-party contracts, rules violations and an owner’s unpaid share of common expenses. (John Wildgoose / Getty Images)

New legislation will ease some of the restrictions on how board members conduct their affairs, allowing them to convene privately for an expanded number of reasons starting Jan. 1, 2017.

Both the Illinois Condominium Property Act and the Common Interest Community Association Act were amended by Public Act 099-0567 to allow closed meetings to discuss the following: probable or pending litigation, third-party contracts and employment issues, violations of the rules and regulations of the association and an owner's unpaid share of common expenses. Boards also may interview prospective employees and contractors and consult with the association's attorney.

The current law allows boards to discuss only litigation, employment, rules violations and delinquent owner accounts in closed meetings — sometimes called executive sessions — that take place within the framework of a properly noticed meeting open to all owners. That is, the board calls an open meeting, recesses for the closed session, and then reassembles for the open session.

With the new legislation, boards can meet at any time to discuss the sanctioned issues. They can communicate in person, on the telephone or via email. However, like the current legislation, the amended version requires all voting be done in open meetings.

Industry professionals largely are welcoming of the reforms. Marcia Caruso, president of Caruso Management Group in Naperville, believes board members will be better prepared for meetings because of them.

"With the changes now, we hope to have discussions prior to a board meeting that help board members to understand what the issues are and what the possible solutions are," she said. "If the board had to discuss every single item in a public meeting, the meetings would take hours to complete."

The restrictions on closed meetings were the result of a controversial lawsuit, Palm vs. 2800 Lake Shore Drive Condominium Association, also known as Palm II.

In its 2014 ruling, the Illinois Appellate Court banned gatherings of a board or a quorum of the board to discuss association matters outside open meetings. That eliminated the common practice of workshops or preparation meetings.

Palm II also calls for procedures such as separation of reserve and operating funds, and strict adherence to the provisions of an association's governing documents.

In Caruso's view, the appellate ruling made excellent points, but it also tied the hands of boards and managers.

"When Palm II was first passed, it created bedlam because two board members were afraid to talk to each other at the grocery store for fear they were breaking the law," she said. "With these tweaks, we can go back to talking to each other and sharing information."

The amendments are sure to reduce the workload for board members, said Asa Sherwood, president at FirstService Residential, a property management company in Chicago.

"With strict enforcement following the Palm II decision, we have noticed the number and duration of board meetings steadily increasing," he said. "Board members are volunteers who typically don't have time for additional meetings, not to mention the additional time commitment these meetings place on the property managers. The changes should cut down on the duration of the meetings."

"I think the amendments are a positive that gives boards a little more flexibility and the ability to accomplish more," said Gary Kass, president of Kass Management Services in Chicago. "They still have to come out of the (executive session) and take the votes, so you're not losing transparency."

Michael Rutkowski, president at First Community Management in Chicago, said he would like to see the list of allowable topics in executive session expanded further to include discussion of possible new rules and regulations.

"The law, as well as life, is a work in progress," Caruso said. "It is always changing."